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On a recent afternoon on a rooftop near Rockefeller Center in midtown Manhattan, three influential female fashion-bloggers stood against the backdrop of St. Patrick's Cathedral, Saks Fifth Avenue, and the skyline beyond. Dressed casually, but oh-so-carefully, in ripped boyfriend jeans, aviator sunglasses, and vintage paisley, they were preparing to shoot a conversation with Lew Frankfort, the chief executive of accessories-maker Coach, about the company's Fall 2012 Legacy Collection, a brightly colored take on the 70-year-old company's classic duffle sacs, totes, cross-body bags, and accessories.

At ease in a dark-blue suit and white shirt with no tie, Frankfort jumped into the conversation after one of the women mentioned that she carries a Coach men's dopp kit as an evening clutch. He said that very kind of creativity influenced the dual-gender designs in the collection. Then, stepping into Coach's pop-up showroom, Frankfort, who speaks in short bursts, explains how the company reinvented its classic leather duffle sac with bright colors. "We added tassels," he says. "They add a sense of in-motion energy."

Frankfort, 66, wasn't always a master of fashion. The Bronx-born son of a New York City policeman and a stay-at-home mom, he campaigned for civil rights and protested the Vietnam War while a student at Hunter College, where he also served as president of the student body. After earning an M.B.A. in marketing from Columbia Business School in 1969, he took a job with the City of New York and worked his way up to commissioner of child development before joining Coach in 1979, when it was a $6 million-in-sales leather-goods maker.

Frankfort is a keen believer believes in meritocracy: "People should get ahead based on their ability to perform against measured results."
Evan Kafka

Coach (ticker: COH) now manufactures and sells handbags, briefcases, wallets, gloves, shoes, and scarves in more than 650 retail stores in the U.S. and Asia. And with $4.8 billion in revenue forecast for this year, it is the leading U.S. maker of women's accessories.

Indeed, Coach has long been in the forefront of "accessible luxury," or high-quality merchandise designed and priced to appeal to the mass-affluent population—say, those with incomes of $100,000 or more—as well as to the higher end. "Coach practically created the segment," says Dana Telsey, CEO of retail consultancy Telsey Advisory Group. "They've created a brand that customers can identify with and can feel comfortable coming back and making repeat purchases."

Frankfort breaks it down much more analytically. "First, the product needs to be carefully crafted from excellent materials," he says, "and be distinctive and easily recognizable. Second, it needs to have limited distribution, so it's not available elsewhere. Third, the consumer needs to have a sense that owning such a product helps them generally. And product needs to be available where your target consumer shops at affordable price points."

That's exactly how Coach's stores are laid out. You walk in the front door to a brightly colored group of smaller items, including wallets, scarves, sunglasses, and shoes, which while displayed together can range in price considerably; wallets, for example, cost anywhere from $40 to $270, depending on size and materials. Displays along the walls similarly group handbags by shape and color scheme, rather than by price. Styles also vary widely: One store Barron's visited displayed classic and understated styles like the duffle sac next to shimmery pink and sequined bags, prominently adorned with Coach's large "C" logo. "Consumers are smart," Frankfort says. "They can tell why one product costs more than another."

FRANKFORT HAS BEEN A strong believer in meritocracy since first reading John Stuart Mill in college. "Decisions should be based on measured results, and people should get ahead based on their ability to perform against measured results," he says. Not surprisingly, he quickly became frustrated with city government. After a year of "not being challenged," he says, he began to ask around, looking for "the smartest person in city government."

He soon met Herb Rosenzweig, who once had worked under Defense Secretary Robert McNamara. Rosenzweig had turned against the war and was running a small team working on redefining the offerings of one of the city's social-services programs. Rosenzweig, whom Frankfort describes as "brilliant and irascible," became his first mentor. "It was in many ways like getting a second M.B.A. because I learned how little I really knew," Frankfort says. "He could break a complex problem into understandable major points and lay out logical solutions that would be to satisfy the greater social good."

Frankfort was a quick study. In 1976, he was put in charge of New York's Head Start and day-care programs, managing a $300 million budget. It was from there that he made the unlikely transition to Coach, after being passed over for a significant promotion by newly elected Mayor Ed Koch, who Frankfort says told him that he was "too independent and too principled."

Koch disagrees. "That is an absolutely outrageous statement," he says, though he concedes that Frankfort is an "able guy."

Frankfort was riding in a taxi with a former colleague, after giving a guest lecture on day-care reforms to a graduate-school class at Columbia, when he learned about Coach. "He said, 'I have a very close friend who runs a very small leather-goods company called Coach, and he is looking for a protégé,' " Frankfort recalls; he was told the Coach leader was highly ethical and treated employees well. "And so I met my second mentor, Miles Cahn, who was the founder of Coach."

Frankfort joined Coach as vice president of new business development in 1979 and quickly came to understand that Coach's well-made products gave consumers a perceived value. He decided that reaching consumers without retail middlemen would allow the company to enhance the brand experience.

"I looked at this brand called Louis Vuitton that controlled its distribution fully," Frankfort says. "They only sold product through their own stores. And therefore it was able to control the retail presentation, the assortment, the service, the imagery, and so forth, and I thought there was an opportunity for me to create a democratized version of this European brand that would be appropriate for an egalitarian society like the U.S., where anyone could be anyone."

FRANKFORT LOST NO TIME getting his vision off the ground, beginning with a catalog business to take advantage of the rising popularity of shopping by mail. He followed that by opening Coach's first retail store on Madison Avenue in 1981. Many doubted the move, but from Day One, the 450-square-foot store was so successful that there were lines out the door. The store produced $1.2 million in sales in its first year—10% of the company's total.

In 1985, Coach's sales reached $19 million, and people began to take notice. That year, Sara Lee (SLE) bought the company for a rumored $30 million, making Frankfort an executive of the parent corporation. Though he remained in charge of Coach, from 1991 to 1996, he also led a larger group of Sara Lee businesses, including intimate apparel brands Playtex, Bali, and Wonder Bra, and Champion sportswear.

During that time, he says, "I developed an emotional distance and was able to see that our emerging competitors were giving consumers greater choices and that we needed to broaden our appeal from a single look and single material," Frankfort says.

He told the leadership of Sara Lee that he wanted to come back to Coach, full-time. In 1996, he recruited Reed Krakoff, who had been at Anne Klein and Ralph Lauren (RL), to be Coach's creative director. "It was clear that he understood the intersection between design and commerce," says Frankfort. "He quickly understood the essence of the Coach brand."

Under Sara Lee, Coach expanded into London and Tokyo, opening in-store boutiques as well as stand-alone retail outlets. At the same time, the company broadened its product offerings and updated its designs to bring the brand to the cutting edge of fashion. Sales skyrocketed to more than $500 million.

In 2000, Sara Lee spun off Coach in an initial public offering. From 2001 to 2011, the company's sales increased at a compound annual rate of 22%, while earnings per share grew 35%. This year, analysts expect profit to jump 20%, to $1.04 billion, or $3.52 a share, rising another 18%, to $4.16, in 2013. The shares, which closed Friday at $65.89, are up 3,195% since the IPO.

THERE WERE SKEPTICSalong the way. In the spring of 2008, the chief of research at a very prominent money-management firm told Barron's off the record that Coach was headed for a fall. "They only know how to manage growth," she said of Frankfort and his management team, predicting that an imminent economic downturn would prove to be their comeuppance.

Frankfort saw the same thing coming. "We began to take steps in advance, and we began to conceive of a new assortment of products that would be youthful in attitude and would have sharper price points to appeal to a consumer who was increasingly becoming price-conscious," he says. When the recession hit, competitors all had to take markdowns, but Coach's products never went on sale.

Sales grew 1.6% in 2009, and profit dipped 7.3%. The nine other stocks in the Dow Jones Luxury index's top 10 saw sales fall 6%, with earnings plunging 32.5%. This year, Coach's profit will be 40% higher than at the 2008 peak.

Now Frankfort has his sights set on expanding Coach's international operations. The company, which currently gets 90% of its sales from the U.S. and Japan, is expanding throughout Asia, the Middle East, and Europe. China represents a particularly important opportunity: Coach has 85 locations, with 10 more set to open by the July close of its fiscal year and another 30 in fiscal 2013.

"Our business was up 60% in China last quarter, in line with previous quarters," says Frankfort, who sees substantial consumer confidence there and expects a soft landing for China's economy.

Coach is also pushing hard into men's accessories—premium bags and accessories—a market the company estimates at $5 billion worldwide. The company believes its men's sales could hit $1 billion in the next few years, up from $200 million in 2011 and an estimated $400 million this year.

That said, Frankfort says the traditional domestic women's business is growing at 15% a year and the category will continue to expand at 5% to 10% a year, as women shift some of their apparel spending to accessories: "A small reduction in apparel spending can result in a very substantial increase in accessory spending."

American women, it seems, are finally learning what Parisian women have known for decades: Accessories make the outfit. "I must say that they did not know that in 1995," Frankfort says—and he helped point the way. For that, shareholders can say merci.